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South Korea Pharmaceuticals and Healthcare Report Q4 2011 Published on August 2011
Report Summary BMI View: Unlike some observers, BMI classes South Korea as a developed country and this is underpinned by the balanced risk/reward profile of its pharmaceutical market. Negative attributes include the sub-standard enforcement of intellectual property rights, market access issues and price cuts. Demand for pharmaceuticals will be supported by an ageing population and a culture of medication. The anticipated free trade agreement with the US will be emphatically welcomed by foreign multinational drugmakers.
Headline Expenditure Projections - Pharmaceuticals: KRW13,212bn (US$11.43bn) in 2010 to KRW13,917bn (US$12.65bn) in 2011; +5.3% in local currency terms and +10.7% in US dollar terms. Our forecast has been revised down from Q311 due to macroeconomic factors. - Healthcare: KRW78,406bn (US$67.80bn) in 2010 to KRW83,873bn (US$76.25bn) in 2011; +7.0% in local currency terms and 12.5% in US dollar terms. Our forecast has been revised down moderately from Q311 due to macroeconomic factors. - Medical devices: KRW4,151bn (US$3.59bn) in 2010 to KRW4,512bn (US$4.10bn) in 2011; +8.7% in local currency terms and 14.3% in US dollar terms. Our forecast has been revised down slightly from Q311 due to macroeconomic factors. Business Environment Rating: South Korea's Pharmaceutical Business Environment Rating (BER) has fallen from 67.9 out of 100 in Q211 to 66.4 in Q311. The downgrade is due to a negative revision to its Industry Rewards, which comprises pharmaceutical market size, per-capita spending on medicines and sector value growth. South Korea retains second place in the 18-country Asia Pacific ratings system. Key Trends & Developments - In July 2011, The Korea Food and Drug Administration (KFDA) approved the sale of FCBPharmicell's Hearticellgram-AMI, a stem cell therapy for acute myocardial infarction. The product is injected into coronary arteries to assist the regeneration of cells, resulting in the recovery of heart function. The use of stem cell treatment is still largely experimental, and costly in the case of bone marrow transplant. Therefore, BMI believes South Korea's approval of Hearticellgram-AMI highlights a significant milestone as regulatory bodies are slowly opening up to the use of stem cells on a wider scale. BMI Economic View: South Korea's current account surplus widened in March 2011, coming in at US$1.4bn from a revised US$1.1bn in February. Both goods exports and imports hit record highs, with the increase in exports exceeding that of imports, boosting the goods surplus. Meanwhile, the services deficit narrowed, as services exports similarly outperformed services imports. While we expect the underlying trend of current account surpluses to remain intact, we note that the upside is limited. As South Korea's oil-intensive economy is very dependent on oil imports (the world's fifth largest net oil importers), elevated oil prices will continue to prop up import costs. BMI Political View: The ruling Grand National Party (GNP) won only one of the three key races during the April 27 by-elections and the disappointing results could stall President Lee Myung-bak's reform drive and exacerbate factionalism within the party. In contrast, the opposition Democratic Party (DP) won both the Bundang and Gangwon races, two areas which were previously thought to have a conservative bias, and this strong resurgence will likely strengthen the party's position within the opposition camp.
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South Korea Pharmaceuticals and Healthcare Report Q4 2011 (From Issuu)
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